The African Union (AU) on Wednesday launched the Africa Credit Rating Agency (AfCRA) in Port Louis, Mauritius, seeking an African-owned view of sovereign and corporate risk after years of complaints that global ratings inflate the continent’s cost of capital.
The agency, known as AfCRA, was unveiled by the African Peer Review Mechanism, which coordinated the project after an AU decision dating to 2017. African leaders endorsed the idea in 2018.
At the official launch, H.E. Mahmoud Ali Youssouf, chairperson of the AU described the establishment of AfCRA as a watershed moment in Africa’s economic history and a significant step towards strengthening the continent’s financial sovereignty.
AfCRA will rate sovereigns, sub-sovereigns, financial institutions and companies, with early emphasis on local-currency debt. Officials say it will complement, not replace the big three: S&P Global, Moody’s and Fitch, which together dominate global ratings.
The AU says the agency will not be owned by governments, a design meant to protect independence. It is to be funded by shareholder capital and operating revenue. Shareholders have not been fully disclosed. South Africa’s Sifiso Falala was named interim chief executive.
The coverage gaps have always been the bone of contention. African Peer Review Mechanism (APRM) says Africa’s capital market is worth about $4 trillion, yet less than 5% of instruments by value carry a rating. The AU says 23 African economies still lack a rating from the big three.
Policymakers tie those gaps to price. A 2023 UN Development Programme estimate, still cited by African officials, puts the cost of rating “idiosyncrasies” at $74.5 billion in extra interest and forgone borrowing. The AU says external debt service rose to $163 billion in 2024 from $61 billion in 2010.
Afreximbank has argued the penalty is hard to square with repayment data, citing Moody’s Analytics figures that put African infrastructure-loan defaults above 1.9%, against 4.6% in Asia and 10% in Latin America.
The dispute sharpened this year after APRM criticised Fitch’s downgrade of Afreximbank. Fitch has said its criteria are applied consistently worldwide. Ghana and Zambia, both through recent restructurings, have long blamed downgrades for locking them out of markets. Both have since seen upgrades as deals closed.
The AU has cautioned that AfCRA will not materially cut financing costs soon.
